Question

In: Accounting

Given the following accounts: Wages Expenses 4,000 Receivables 2,662 Land 17,684 Automobiles 56,163 Rent 700 Commercial...

Given the following accounts:

Wages Expenses 4,000
Receivables 2,662
Land 17,684
Automobiles 56,163
Rent 700
Commercial Paper Payable (3 months) 3,754
Long Term Debt 24,754
Long Term Interest Payable 1,467
Capital 3,350
Accounts Payable (11 months) 23,698
Retained Earnings 46,381
Cash and Cash Equivalents 6,414
Sales 51,496
Other Income 250
Inventories 25,076
Other Expenses 500
Transportation Expense 165
Debts due within one year 4,595

Build the balance sheet and the income statement

What is the current ratio?

Solutions

Expert Solution

evenue
sales $51,496
Other Income $250
Total Income $51,746
Less: expenses
Wages expense $4,000
Rent $700
other expenses $500
Transportation expense $165
Total expense $5,365
Net Income $46,381 [$51,746-$5,365]

Balance Sheet

ASSETS
Current assets
Receivables $2,662
cash and cash equivalent $6,414
Inventories $25,076
Long term assets
Land $17,684
Automobiles $56,163
Total Assets $107,999 [$2,662+$6,414+$25,076+$17,684+$56,163]
Liability and shareholder's equity
Liabilities
current liability
Commercial Paper Payable (3 months) $3,754
Accounts Payable (11 months) $23,698
Debts due within one year $4,595
Long term liability
Long Term Debt $24,754
Long Term Interest Payable $1,467
Shareholder's equity
capital $3,350
Retained earnings [net income of the year] $46,381
Total liability and shareholder's equity

$107,999 [$3,754+$23,698+$4,595+$24,754+$1,467+$3,350+$46,381]

Assets and liabilities which are due within one year are current assets/liabilities

current ratio = Total current assets/ total current liabilities

Total current assts = $2,662+$6,414+$25,076

=$34,152

Total current liabilities = $3754+$23698+$4595

=$32,047

Current ratio=$34,152/$32,047

=1.07 (rounded off to two decimals)

ekkarill92 answered 3 years ago
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